Competition issues affect Thunder Bay port, says report

by Canadian Shipper

Thunder Bay Port Authority’s shipments have been declining over the years, but a number of variables have made it difficult for officials to pinpoint the reason why, says a report in the October 1 issue of Northern Ontario Business.

Market shifts, internal and external port competition, location, prairie drought and technological developments in rail have taken chunks out of the Thunder Bay port’s market share, says the report.

“This is an issue for all Canadian ports. The seaway has so many competitive loads like rail, and now other ports, … there are all kinds of competing forces,” says Tim V. Heney, director of terminal operations at the Thunder Bay Port Authority.

Prior to the 1960s, he says, the Keefer Terminal in the hub of the Thunder Bay port could handle up to one million tons of general cargo per year. But in the last 10 years, and more specifically the last three, there has been a decline in the shipment of grains, which has been the port’s primary commodity. The Port of Thunder Bay reports its grain total for 2002 was 5.6 million tonnes – the lowest on record. Officials point to a number of reasons for the decline.

Today, a majority of the Canadian crop goes to Asia, and it is technically more efficient to go through the Vancouver port.

The seaway has faced higher tolls and shippers are held ransom to higher artificial costs, Heney says. The United States, meanwhile, does not charge for seaway fees and most Canadian ports are within a few hundred miles of U.S. border ports. As well, the Canada Marine Act mandates ports to be self-sufficient. Moreover, governments suggest ports should be able to generate revenue.

“Our facilities (buildings and port) here have to pay property taxes. In the United States the ports charge property taxes,” Heney says. “They are heavily subsidized and we have to be self sufficient and we do not receive any funding.”

But there is one port that has received funding, according to the report.
The Port of Churchill located on the West Coast of Hudson Bay to date has received approximately $52 million in Canadian federal funds, says Tom Henley spokesman for OmniTRAX, the American company that bought the port in 1997.

The Canadian Wheat Board, a department that controls the shipment of grain, is the port’s best customer, since they want to obtain the cheapest price for the farmer. Henley suggests that prairie farmers can save approximately $20 per ton on freight by shipping from Churchill instead of other transporting destinations.

Henley describes OmniTRAX as a privately operated company without federal funding.

“That figure ($52 million) however, was money the government had not put into the port during the last few years (when) it owned the port,” Henley says.
Henley says the Canadian contribution of approximately $2.2 million in subsidies this past spring pales in comparison to the subsidies the Canadian ports receive from the government. But Heney says he is confused by Henley’s statement. To his knowledge he knows of no financial contribution to the Thunder Bay port.

In the past three years and particularly this year, there is a heavy push to ship all they can through the northern port and that has cut approximately 12 per cent of the total grain shipment out of the Thunder Bay Port, Heney explains.

The Port of Churchill will close nearer to October or the first weeks of November. Henley could not disclose information on the projected estimates of cargo or how many tonnes the port has taken in thus far. Nor could he provide rate charge breakdown for shipments, including rail.

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